Personal Health Records and Health Information Technology--Costs, Policies and the Incentives Driving Adoption

    • November 7, 2009

Chapter 4 laid out the landscape of health information technology (HIT) and described some of the systemic barriers to advancing HIT—such as the fragmented state of the health care system, the diversity of health care data, and the technical difficulties inherent to sharing health information. This chapter takes a fundamentally different approach to analyzing the question of HIT adoption. It shifts the focus from the macro-level and instead looks at HIT adoption from the perspective of the various individual stakeholders within health and health care. It investigates the incentives driving (and hindering) PHR adoption among physicians, hospitals and patients, and it delves into the policies and regulations that shape those incentive structures. Questions about the privacy of health data, physician liability for patient-sourced data, and how (and for what) providers get paid are crucial factors that, in some instances, hinder the adoption of health information technology. Addressing these policy issues is a critical step towards realizing the full power and potential of personal health records.

In order for PHRs to flourish, health care providers must increase their systematic use of electronic health records (EHRs) and other health information management systems that communicate with personal health records. Despite the promise EHRs and PHRs hold for improving health outcomes and quality of care, hospitals and physicians have been slow to purchase and implement these systems. According to recent survey analysis funded by the Robert Wood Johnson Foundation, only 13 percent of physicians reported using a basic EHR and 4 percent reported using a fully functional EHR. Nearly two thirds of physicians without EHRs cited cost as a key barrier. The authors of the survey estimate that it would cost $60,000 for a physician or practice to install an EHR. This price tag can be especially intimidating for a small practice of only four or five doctors, each of whom would have to personally shoulder a $12,000 to $15,000 investment.

An investment in HIT is not limited to the up-front capital expenditure either. In the near-term, doctors and staff must be trained on the new equipment and make adjustments to their clinical workflow. Over time, EHRs require maintenance and periodic software upgrades. Hospitals and physicians must weigh all the costs—including the short-term losses to productivity and the ongoing maintenance expenses—when considering the business rationale for an investment in HIT. For an in-depth analysis of the incentives and barriers to HIT adoption (financial, legal, technical and organizational), see Chapter 5 of Health Information Technology in the United States: The Information Base for Progress. Or, check out the video highlighting the findings from the report.

Many providers have argued that there simply is not a good business case for adopting electronic records systems with PHR components. In Part 2 of the special podcast series, “Personal Health Records in a Digital Age,” Paul Tang, M.D., the chief medical information officer at the Palo Alto Medical Foundation and chair of the national advisory committee for Project HealthDesign, says that how doctors are paid is actually part of the problem. “Giving people advice in an online fashion is not reimbursable in today’s world,” according to Tang. “Even though it will prevent a complication because you’re reaching someone earlier, and it can prevent an office visit, which is obviously much more expensive, ...[the] limitations of the current reimbursement system create a disincentive to use this efficient patient-empowering tool.” Although e-visits and increased patient engagement with physicians are among the reputed benefits of PHRs, they are not currently part of the third-party reimbursement structure in this country. According to the expert panel, what is needed is a change in the definition of what it means to provide health care to encompass e-visits, e-mail and the coordination of care among providers. Currently, providers are actually paid less when they leverage health information technology to deliver more efficient care, because time spent on those activities trades off with more lucrative efforts, such as office visits and procedures.

Further complicating the business equation is evidence from the Health Information Technology in the United States: The Information Base for Progress report, which suggests that “as much as 80 percent of the potential savings generated through HIT inures to insurers and health care [purchasers] … in the form of lower premiums and enhanced worker productivity.” According to the report’s analysis, providers reported improved efficiency in billing procedures, but complained that those improvements were offset by losses to productivity and the cost of maintaining the system.

In some cases, there are direct disincentives to investing in HIT. For example, armed with their data, patients might be more likely to leave a practice with which they are not satisfied. This creates a perverse incentive not to share information across health care entities. If providers and clinicians cannot capture more of the financial benefits of HIT—or even recuperate the cost of a PHR-compatible records system—then there is little reason to expect them to participate.

David Lansky, Ph.D., CEO of the Pacific Business Group on Health and chair of the Markle Foundation’s workgroup on Consumer Access Policies, summarized these interrelated challenges in Part 3 of “Personal Health Records in a Digital Age.” According to Lanksy, “It is important to keep in mind that the various enterprises [and] organizations that are active in helping us manage our health are all businesses. And, they are pretty smart. They do things for a reason. In this case, there is more advantage to them in keeping control of their customer’s and their patient’s health information than there is in releasing it and making it easily portable and available. So, until there is a business reason for them to share information with each other and with us, they probably won’t do it.” For a summary of all the costs and benefits that providers weigh when considering adopting a PHR, see Chapter 6 of the Connecting Americans to Their Health Care Final Report from Connecting for Health and the Markle Foundation.

In order to address the market failures hindering EHRs and PHRs, the U.S. Department of Health and Human Services (HHS) instituted several regulatory changes aimed at speeding the adoption of HIT among physicians and hospitals. For example, HHS revised the Stark Law to assuage concerns that hospital-issued HIT subsidies could be construed as illegal under the physician self-referral law. Liability is another prominent concern for clinicians, and HHS aimed to address the issue through various additions to the safe harbor regulations. An issue brief from the Center for Studying Health System Change details the changes to the anti-kickback regulations and the safe harbor provisions. The brief examines why hospitals have been slow to support investments in HIT, despite the adjustments to the regulatory environment. More recently, the American Recovery and Reinvestment Act (ARRA) designated more than $19 billion for advancing HIT. The bill includes direct cash incentives for physicians and hospitals that adopt EHRs. If ARRA has its intended effect, it will improve the business case for PHRs and tip the balance of incentives in favor of HIT investment.

Clinicians are not the only ones that need convincing, however. Patricia Flatley Brennan, R.N., Ph.D., director of the Project HealthDesign national program office, observes that patients also need an incentive to use PHRs. The case for PHRs is pretty clear for individuals with a chronic illness (as discussed in detail in Chapter 2 of this feature); but, according to Brennan, some people need an inventive to take a more active role in their health. PHRs require a commitment from patients to monitor their health, engage with their physicians, and sometimes manually enter their health information. Brennan says that “if a lay person is going to spend the time to record and understand information about themselves and interact with their clinicians...they need to be heard and respected, and brought in as part of the care team.” As Brennan notes, this currency of equal respect and individual responsibility may prove a more effective motivation to patients than a set of financial incentives.

Privacy is also of paramount importance to patients. Privacy is perhaps the single biggest issue that consumers list as a barrier to their adoption of personal health records. Given the complexity of the issue and its centrality to realizing the full potential for PHRs, we address privacy policy and challenges in a separate chapter of this feature. Chapter 6 expands upon the analysis presented in Chapter 5, focusing specifically on privacy policy and its implications for the future of personal health records.